HTC's Exec Exodus Prompts Questions About Company's Future

It's never a good sign when an ex-company executive takes to Twitter to urge his former coworkers to head for the hills. That executive was just one of several recent HTC departures. Combine that news with dismal sales of two high profile phones and you've got industry speculation working overtime. The irony is that one of those phones, the HTC One, is getting rave reviews, but production problems may have hamstrung it.

Top executives are leaving
HTC, as the smartphone company's market share dwindles rapidly, according to published reports.

The latest to depart is HTC Asia CEO Lennard Hoornik, who joins at least five other senior executives. Those include product strategy manager Eric Lin, who issued a tweet urging colleagues to leave the company.

The departures follow changes instituted by new chief marketing officer Ben Ho, who moved some planning and strategy back from the company's Seattle office to corporate headquarters in Taipei.

"The U.S. was HTC's strongest market before them moving some things back to Taipei," Michael Morgan, a senior analyst at
ABI Research, told the E-Commerce Times. This could have been because the U.S. market was saturated and China was seen as a growing region.

HTC declined our request to comment for this story.

Many Were Chosen but Some Have Fled

In addition to Hoornik and Lin, the HTC executives who have left the company include chief product officer Kouji Kodera; vice president of global communications Jason Gordon; global retail marketing manager Rebecca Rowland, and digital marketing director John Starkweather.

Starkweather has reportedly joined AT&T and both Lin and Rowland apparently have signed up with Microsoft.

Hoornik, who was HTC Asia's CEO for about two years, handled Singapore, Malaysia, Thailand, Indonesia, the Philippines, India, Australia and New Zealand. He will be temporarily replaced by HTC's chief financial officer Chan Chia Lin until a permanent replacement is found.

"It's always a bad thing to lose a senior executive, but to lose a team of them is a horrible thing," ABI's Morgan said. "But these things happen."

However, "I think there are still some highly qualified people in the company," said Julien Blin, a directing analyst at
Infonetics Research. "They have a new CMO and he's trying to change things."

Possible Causes for the Chaos at HTC

The most obvious possible causes include the spectacular failure of the Facebook-centered
HTC First, which debuted globally with much fanfare in April. It's proven to be such a dud that AT&T has reduced its asking price for the device from $99 to
$0.99 with a two-year contract, and there are rumors that the carrier is thinking of scrapping the phone from its lineup.

Then there are the relatively poor sales chalked up by the flagship HTC One smartphone.

"It's a great device," Infonetics' Blin said. "But people tend to forget that HTC is a lot smaller than Samsung in terms of resources and marketing, and it's tough for anybody to compete against Samsung and Apple."

The problems with the HTC One have been partly laid at the feet of company cofounder and CEO Peter Chou, who reportedly insist the firm press ahead with the device despite being warned about manufacturing and supply delays. Those supply issues apparently hampered sales.

Chou has been making snap decisions rather than working on a long-term strategy, according to reports.

A Change of Direction?

The exodus could also be the fallout from a change in emphasis and strategy.

The new emphasis on China depressed HTC One sales, slashed revenue, and could have led to Chou's making snap decisions, ABI's Morgan said.

Meanwhile, HTC's production of the First smartphone for Facebook went contrary to its strategy of establishing its own global brand and was "a bad brand dilution," Morgan said. As a result, HTC executives "got caught in a switch of market dynamics."

On the other hand, HTC could be cleaning house to bring in new blood.

Coming Back From the Brink

It's not clear whether the company can recover from this debacle.

Nine out of 10 handset makers who lose market share don't recover, ABI's Morgan said. On the other hand, HTC might be put up for sale and "there are some people that can't afford not to buy it."

However, "People still see HTC as an original device maker that makes really good phones, so it can make a comeback," Infonetics' Blin told the E-Commerce Times. "They have some new phones in the pipeline and it's not over yet."